Monday, August 22, 2011

Why I Speak to the State and Defense Departments on China and Africa

Angolan offshore oil rigs.    photo credit: Neftegaz.r
At the end of summer, when the Western world pauses, I am catching up on some China-Africa reading. One piece I missed dates from August 2010: an article in China Monitor by Jesse Salah Ovadia, a York University (Canada) Ph.D. student who did fieldwork in Angola. His comments on his interviews with US government officials in Angola were illuminating, and disturbing:
In an interview I conducted with an American diplomat in Angola – carried out as part of a wider research project - he repeatedly denigrated the quality of Chinese infrastructure projects in the country and argued that the Chinese "don‘t have any interests here other than resource extraction. ... It‘s plain and simple. They are just here for the resources. They are not interested in the country‘s well-being, only in extracting what they need economically." ...
...The diplomat went on to insist that the United States espouses a much more holistic set of interests than China: "Yes, Angola is the sixth largest supplier of oil to the U.S., but that is not the sum total of our relationship. We still promote democracy and human rights, and our goal is free, secure, and peaceful relationship with Iraq—I mean Angola."
Iraq? An interesting little slip, that.

What about our holistic set of interests? In 2009, according to budget documents, the US allocated $56 million in aid to Angola -- mainly global health and child survival. We gave nothing under "feed the future" for agriculture and food security, $2 million for basic education, $4 million for family planning/reproductive health, $14.7 million for HIV/Aids, $30 million for malaria, $2 million for micro-enterprises, $300,000 for trade capacity building, $3 million for water funding, and apparently nothing for general infrastructure (roads, electricity). I didn't see anything specifically for democracy and human rights, either.

That same year, according to the International Energy Agency, the US imported about $10 billion in petroleum from Angola, and $18 billion in 2008.

China's official aid to Angola has also financed malaria initiatives, and health, but has been modest. Where the Chinese make the difference is in using a portion of their oil imports to secure major infrastructure loans that have built massive reconstruction infrastructure in Angola. Between 2004 and today, this has amounted to $10 billion (mainly oil-backed), with another $1.5 billion line of credit to be focused on development in agriculture, from China Development Bank, and $2.5 billion from a commercial bank, ICBC (the latter two are not oil-backed).

None of this Chinese finance should be considered "official development assistance" as it is offered without subsidies, at LIBOR rates. But it does support development. So a lot of China's oil imports from Angola are used to finance Angolan development, but that's not the case for us. (Of course there is the Hong Kong-based syndicate that controls the China International Fund which is doing far less development and reaping far more profit from its cozy relations with Angolan elites. This was covered pretty well by the Economist in a recent article). But that is a separate issue.

What about the impact of this infrastructure finance? Ovadia said:
China‘s new role in Angola has brought the financing needed for the country‘s reconstruction and significant investment has been made in key sectors of the economy. Journeys that once took most of a day can now be completed in a few hours and neighbourhoods are being connected to national power grids for the first time... there is little doubt that the projects are having a major impact on the country.
 In a footnote, Ovadia adds:
The diplomat‘s comments were somewhat contradicted a few weeks later at a public forum in Luanda on the role of China in Angola when an American defence attaché from the embassy commented publically that China was trying to create "a new slave empire in Africa,"* demonstrating that the 'extreme-China threat‘ position is still alive and well.
This is why I speak to the State and Defense Departments whenever they invite me (I regret expressing some hesitation to speak to the CIA when one of their officials approached me informally -- they never followed up with an invitation). Washington: I'm ready to present a different, empirically based, a bit wonky, but, I hope, more balanced perspective, if you're ready to hear it.

----
*Perhaps he was simply quoting the title of a newspaper article published by Peter Hitchens a few years ago in the UK?


18 comments:

  1. I certainly agree with your assessment of Western, but especially US, views on China in Africa falling into the “China threat” discourse. I’ve been to a China-Africa meeting in Nairobi where the vast majority of the diplomatic attendees where from the US military and the Culinary Institute of America.

    But an obvious fact which I feel you don’t always accept is that the vast majority of interest about “China in Africa” stems not from an interest in African development but in an interest about China’s rise as a global power, which happens to be most visible in Africa today (in my opinion, this is why the phenomenon is somehow strangely extracted and divorced from the wider discourse on globalisation, the context in which China-Africa relations should rightly sit). This is why the facts are often ignored in preference of rhetorical China bashing.

    There’s definitely a constituency in the US (especially within the military-industrial complex) which has an interest in perpetuating the China Threat wherever they see it. However this is not the full story, and you rarely touch on other (albeit related) reason why so many show trepidation about China’s relations with Africa, which is China’s own domestic political system. Few people would think that non-interference is morally acceptable, yet alone a preferable alternative, to the democratic principles that are pushed on African governments through the aid conditionalities of the West. As long as you ignore the link between China’s own domestic situation and its relations with Africa, few will be convinced as to accepting the benefits.

    Lastly, and although you clearly state that it’s not the same, you still compare US aid to Chinese-financed infrastructure in Angola. But the latter seems to me to be simply business, a way in which the Chinese government can subsidise its construction companies to enter new markets. Could we not look at how the Angolan government spent US$10 billion in oil-earnings from the US in 2009 and claim it was also ‘development money’? While China’s provision of infrastructure is on the whole positive, I just think it is not really fair to be analysing – and comparing it - in the aid context.

    Sorry for the long post!

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  2. and sorry for the sloppy grammer too!

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  3. Deborah, I picked up a copy of your book after seeing it posted to from a comment somewhere online. I'm on page 75 now. Thank you.

    American fear of China's investments in Africa bring to mind what's happening now in Libya. Beijing was cordial with the Gadaffi government for decades, yet I was surprised to learn today they were realists about his inevitable fall (at least once it was clear the west was getting involved):
    http://www.thedailybeast.com/articles/2011/06/21/china-s-libya-connection.html

    The author says that the Chinese government not only withheld their veto at the Security Council, but actually invited rebel leaders to Beijing. She remarks at one point "China has a growing unease that Western military intervention in its crucial energy markets could eventually restrict Beijing’s access to oil and gas."

    True to that suspicion, Beijing's actions don't appear to have been enough to secure any stranded investments there. According to this Reuters article:
    http://www.reuters.com/article/2011/08/22/libya-oil-idUSL5E7JM17F20110822

    "We don't have a problem with Western countries like the Italians, French and UK companies. But we may have some political issues with Russia, China and Brazil," Abdeljalil Mayouf, information manager at Libyan rebel oil firm AGOCO, told Reuters.

    While direct western military intervention in Africa doesn't occur frequently, it does tell me that the US and NATO, by virtue of their unquestioned ability to exert force in Africa, always hold a trump card. I'm not sure what that means for the future of Chinese aid and investment there, but it does highlight the differences in approach.

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  4. @Claude,

    I think you missed the fact that before China re-entered Africa in the 90s, African countries had a hard time to access funds much needed for infrastructure development. Yes Angola received billions of dollars from exporting oil to US, but they had been thus far unable to turn the money into infrastructure developments. That is the key difference between oil dollars from China and US.


    @Anonymous,

    To say "Beijing was cordial with the Gadaffi government for decades" is simply wrong. Gadaffi is more friendly with Taiwan's Chen Shui-bian and irritated Beijing publicly many times. He even once called for the creation of an "African Regiment" to counter China's influence in Africa.

    wei

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  5. wei,

    I stand corrected on Gadaffi's relationship with China being cordial. I don't know where I got that. But if China was in fact at odds with Gadaffi and happy to see him depart, the actions of the incoming Libyan government do seem that much more lopsided. For instance, I wonder what will become of the "About 75 Chinese companies" they cite, which "involv[ed] about 36,000 staff and 50 projects" before the war.

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  6. @Anonymous

    Okay, let me give you some links:

    China’s Prickly Gaddafi Ties
    By Mu Chunshan
    March 7, 2011
    http://the-diplomat.com/china-power/2011/03/07/china%E2%80%99s-prickly-gaddafi-ties/

    Thursday, 24 February 2011
    China's rocky relations with Libya
    http://foarp.blogspot.com/2011/02/chinas-rocky-relations-with-libya.html

    You certainly can find more if you want to do it yourself.

    wei

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  7. Thanks for all the good comments.
    Claude, you make a very good point about the values/different systems concerns -- China is not a democracy, has human rights abuses, and etc. However, the West has agreed to mutter about this quietly but still engage China constructively on a host of business fronts, and this engagement has helped bring China where it is today. I think most Chinese are probably glad that the West engaged with China instead of retaining the embargo and isolation that was in place from about 1950 to the mid-1970s. When China adopts the same attitude in Africa, we have a problem with this.

    On the aid/oil comparisons, my intention was to compare the entire picture: aid, oil purchases from US, and aid, oil purchases/infrastructure packages from China.

    Anonmymous and Wei, I think China will be able to engage profitably with the new Libyan government. I don't imagine Chinese companies got those last infrastructure contracts through cozy relations with Gadaffi. They still have the contracts. If the new government wants to focus on reconstruction (and after the bombing by NATO, they'll have to), the Chinese construction firms will undoubtedly be getting more contracts, and will probably regain the contracts they lost.

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  8. Dear professor,

    A resason why your views on Angola are not so imteresting is because you have never been in Angola. Tu quot a Phd thesis on the subject is not 'empirical'.

    Secondly, I stromgly recommend you to read more about China. You need to go deeper than say 'no democracy, no HR, etc'. That is manipulation, because the lack of sensibility of Chinese companies, officials and investors is much more wide and cruel (specially inside China). Again, to live in Taiwan a bit and travel to Sanlitun a few times does not empower you, I am sorry, with 'empirical' work.

    And I strongly recommend you to stop talking about CIA, American government or American entreprises as if they were evil. I think ey are what they are and we all agree ey might do much better. But you can't openly show your suspicious for CIA and then agree that the ministry of Foreign Affairs of China contribute to the translation of your book. That is hypocritical, isn't it?

    谢谢 您,

    妈妈

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  9. 妈妈: I didn't do my China research in Sanlitun, although I did get my hair cut there once. Your statement that China's Ministry of Foreign Affairs is involved in the Chinese translation of my book is news to me. Where did you hear this? Oxford University Press contracted the Chinese edition to the Chinese Academy of Social Sciences, which has also translated and published other development books, such as Ha-Joon Chang's Kicking Away the Ladder. That's why OUP went with CASS. But I don't have a problem with MOFA funding the translation, if this is true. I would be happy if the US State Department helped me to translate it, or if the French or German government paid for translation into their languages. Yes, as someone who grew up in the 1970s, and has done extensive research for three decades in Africa, I have this residual knee-jerk reaction to the CIA (academic cooperation with the CIA has been the subject of much negative discussion in the African Studies Association), but I realize that this prejudice is not very helpful.

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  10. @ Wei

    It is true that Gaddafi personally has sent a lot of blame to China: from colonialism to betrayal of socialism to a comparison of his military approach of his opponents with the approach by the CCP of the Tiananmen demonstrators. “The unity of China was more important than those people on Tiananmen Square,”

    But the Libyan government itself made more fundamental objections to China’s business first approach ....
    http://www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_news%5D=35793&tx_ttnews%5BbackPid%5D=7&cHash=aeaaa879d1

    dan

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  11. @dan,

    Thank you for the article. The Libyan government or Gaddafi, they were the same. The fact is Chinese investment and Gaddafi's to other African countries were in competition. Gaddafi has his personal ambition regarding the direction of African continent, which he needs influence to accomplish, but his influence was unfortunately neutralized by China's influence inadvertently... IMHO.

    wei

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  12. @ Wei
    I myself have never encountered an example of it , but I'm always open to....
    Below an overview of Libya’s investments in Africa;
    http://www.bloomberg.com/news/2011-03-02/qaddafi-s-african-dream-in-tatters-as-net-closes-in-around-king-of-kings-.html

    The difference beeing that Gaddafi made some rhetorical reproaches but that the accusations of his Foreign Minister Musa Kusa are a fundamental critic of China’s foreign policy not only in Africa but also in the rest of the world.

    Despite all the rhetoric, China has for decades never acted as a "friend" of Libya.
    As the standard bearer of the "business first" approach it pursued in an opportunistic way nothing else but his own interests. In no battle it ever defended the Libyan state.
    It voted for UNO sanctions against Libya, did not oppose the military intervention, the first (and probably only ) oiltanker that sailed from a rebel-controlled port was a Chinese one, it maintained more contact with the rebels than with the Libyan government officials, both in China and in the Middle East ...
    OK, I know, on the other side you see a mirror image of this with the Western governments.
    But the difference is that they never pretended that they would never intervene in the internal affairs of other countries nor ever claimed that they would never have contacts with non state actors.
    A bit like the late John Kennedy who never took off a vow of chastity but the Catholic priests did so and used this as their trademark but were not up to their own standards…
    We are not confronted with some kind of ideological or geopolitical China/West struggle, just look how the mutual economic lobbying is done now ...
    It is, as always about economic interests only.
    Have you already noticed that in the slipstream of every U.S. military intervention Chinese companies still manage to always get their hands on most of the economic fruits of it?
    Iraq, Afghanistan, Libya now ...
    The U.S. has got its dose of "boots on the ground" in Somalia, but not so, the Chinese General Chen Bingde ...
    With such priorities, the Chinese superpower established lots of trade relations worldwide (and therefore temporary parallel interests) but that of course makes no friends.

    In political terms, China is discovering a lesson the U.S. has already digested decades ago: "economics is no substitute to politics" and here it is again following the U.S. (eg in response to the hunger crisis in the Horn of Africa). It is identical to the discovery of, again decades after the U.S., the importance of eg a hospital ship or an aircraft carrier ...
    As the U.S. a century ago, after beating Spain, threw the notion of non-interference in the internal affairs of others countries overboard because it was no longer useful in building its empire, you see China taking its first steps to do the same thing ....
    dan

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  13. @dan,

    I agree with you that lots of times China's official rhetoric looks awkward in public media, partly because in today's world, media is pretty much belong to the western world. But IMHO China's foreign policy does so far one thing very well, that is sticking to the principle it made, which make its behavior very predictable. China's non-interference principle make it not possible to SUPPORT any interference into a sovereign country. But China's African policy is very much in-lined with the African Union's, if you look at this way, it's much easier to understand lots of decisions that China had made, be it Sudan, Zimbabwe, Libya, ..., etc.

    wei

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  14. @ Wei

    I thought above examples of blatant interference in the internal affairs of Lybië were clear enough. If you do want more info about this subject, feel free...
    As China's global interests grow bigger and bigger, the tension between the theory of non-interference and practice of interference becomes also bigger and bigger.
    I live in a small country in the heart of the U.S. imperialism (if such a thing exists) (Brussels as Nato headquarters) and we are also world record holder "country without a government".
    No country, and certainly not the U.S., would dare to give us advice on what kind of government we should form.
    Once China judes its soft or hard power in a country large enough to interfere successfully it does so. Always. Nepal eg get regular advice on which parties should merge, what parties should form a government.
    But big boys are nowadays also the victim of this: the U.S.governement eg is explicitly recommended to cut its public spending and thereby China explicitly cited defense and social security. And so they interfere in the political debate between the two major parties and explicitly choose the side of the Republicans against the Democrats who prefer to impose new taxes ...
    dan

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  15. @dan,

    I agree with your logic, as old Chinese saying, things move on, and time passes, rules need to be changed accordingly. US had kept calling on China to take her fare share of burden of the responsibility in the world. I guess it's just a matter of time for Chinese gov to revise some of the principles. Maybe they haven't feel comfortable enough to change it now. But as you said, as the conflicts between the principle and the global interests grow, there will be a point of change. I think they will do it in a gradual and predictable way. The previous example you raise regarding Gen. Chen BingDe's remarks can be seen as a test for the public response. The decision will be made by the very top level of the CCP.

    wei

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  16. The American ambassador at the time in Angola used to work in Iraq for many years, so that is probably the reason for the tongue slip in the first statement, so I think we should refrain for pointing that out. It doesn't serve any pupose and shouldn't be over-analysed.

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  17. Dear Deborah, something missing in my mind. Since these loans repayment period (with grace period) around 20 years, is it true that, China get the oil after 20 years. And also the other missing link in my mind is when the Chinese firm (that completed the projet in Angola) get the payment for the complation of project. Thank you.

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  18. The oil is exported daily. The proceeds from the oil go into escrow accounts in Chinese banks (usually Eximbank). The Chinese firms doing construction are paid in installments as sections of the work are finished and certified, as per the EPC contracts.

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